First as Farce: higher education, the profit motive and the New College of the Humanities

The launch of the for-profit ‘elite’ university, the New College for the Humanities, must be understood in the context of the Coalition’s wider programme to marketise higher education. The first article in OurKingdom’s series 'Capitalism and the University' analyses the big picture
Andrew McGettigan
27 June 2011

This article launches OurKingdom's Capitalism and the University debate page. Tomorrow, we will publish a piece on the Arts and Humanities Research Council and the 'Big Society' agenda, a touchstone for resistance to the Coalition's higher education policy.

In May 2010, on assuming his responsibility for universities within the Department of Business, Innovation and Skills, David Willetts granted BPP, England’s only for-profit higher education establishment with degree awarding powers, the use of the protected title, ‘University College’. 

After the publication of his group’s report, Securing A Sustainable Future for Higher Education, John Browne chose BPP as the venue for his first public appearance.  He underscored the symbolism by concluding:

… I was particularly pleased to deliver my first speech on our review here at the BPP Business School.  This School is exactly the type of private provider which our report sees becoming more important in the future.  Ours is a system which loosens controls on what type of institution can teach what.  Instead, it forces institutions to think more clearly about their mission and how they can best serve their students.

The creation of a small tutorial college in Bloomsbury might do for the humanities what BPP has done for law, business and accountancy. Set up rapidly in conjunction with like-minded investment managers and media professors, AC Grayling’s company limited by share, New College for the Humanities (NCH), can potentially make a return on its founders’s equity stakes, and even turn a profit a few years down the line, while offering intensive one-to-one ‘Oxbridge-style’ tuition.

But once past the initial, overblown headlines about a new, elite ‘university’ in London, we see a startup whose premature launch confused many of the fundamentals of the undertaking. Lacking its own degree awarding powers, it is teaching towards the University of London international programme – a set of syllabuses determined externally – with the consequence that it will be unable to use the protected title, ‘University College’. (Potential Recruits, your profs have no control over setting or marking your final exams!) With no premises, confused temps in the call centre, and a lack of basic arrangements in place, the only institution that appears not to have distanced itself from the claims on NCH’s website is its listed PR company, Colman Getty. From which we might surmise that NCH needed to set out its stall early in order to attract further investment. 

Many have levelled the charges at Grayling – inter alia hypocrite, carpetbagger, plagiarist, used car salesman – even arch-Thatcherite, Terence Kealey, who runs the University of Buckingham, fulminated against "... a bunch of opportunists trying to make some money. ... The great US humanities colleges are entirely charitable foundations, not profit-making bodies. Grayling's lot are just going to be working to make a return for the venture capitalists backing them — and taking a slice of the equity themselves."

This strikes at the central theme – whether higher education (too readily discussed as an ‘industry’ in need of ‘subsidy’), and education in the arts and humanities in particular, should be organised around the profit motive rather than as a charitable endeavour. Grayling’s own explanations about the difficulty of setting up the latter are unconvincing. More credence should be given to the realist line: universities are now wholly oriented to private money; with the government’s proposals for a new marketized funding regime where students are fledgling consumers, this opposition to private, independent initiatives is wholly misplaced. Grayling has gambled that it is time to fold the cards he held (HE fully funded by the state) and walk away, though NCH was incorporated in July 2010, before the publication of the Browne review. 

He suggests we do the same if we seek to preserve the arts and humanities from the commercial pressures to come. For he insists that he is not the threat, he is only anticipating it: there is a new terrain being formed for universities in England by Willetts and co: we await the imminent, repeatedly delayed White Paper (now promised for July). 

Cheap: BPP and London Metropolitan
In this regard, Grayling is right. His new institution is untimely in many regards (of which more below) but the government is currently rehearsing proposals designed to bring in a tier of cheaper, private provision. (BPP will charge around £4,000 pa for its Twitter plus lattes version of contact time.) In the speeches collected on the (BIS website from which all the following citations are sourced), Willetts and his nominal boss, Vince Cable, deliver a clear message. As far back as November, Willetts invoked a “stream of new providers” to admonish universities planning to set fees near the new £9,000 fee cap: “I believe that the challenge for universities is to look very carefully at their costs, not simply assume [they can] take today's costs and put them into the new world." These new providers are supposed to undercut the established universities. 

A few weeks ago, Willetts chose to appear at a platform event alongside figures from BPP and London Metropolitan University, as dual representatives of the low-cost options. The economist, whose report, Universities Challenged, was debated on that occasion, went public early against the costing model for New College for the Humanities. Hence, the publicity around £18,000 annual fees is something of an embarrassment in the week when the government launches its campaign to explain how affordable the new system will be. While Grayling does not seem to have sought government imprimatur in his aim for independence, he did seem surprised when his assumption that his students would access student loans was contradicted, "Oh! Does that mean they've changed the game again?" Ill-informed, and off-message, Grayling may find himself with few serious allies.

Cheaper: HE in FE
The ideological aim for more, cheaper competition is now a financial imperative given the hole in the financial modelling of the proposed student finance scheme. I have outlined the reasons for this in my recent commentary for Radical Philosophy,New Providers: The creation of a market in higher education”, along with a brief survey of some of the possible mechanisms for managing student numbers and access to the ballooning loan scheme. That piece was written at the end of March. Since then, Cable has addressed the HEFCE annual conference, where he gave the clearest statements yet on marketisation – promising to “reward the most competitive providers” whether a ‘public’ or ‘private’, with a variety of “creative” proposals, including “off-quota places”, reserved pools of additional places, the “Opportunities Fund” (Willetts), etc. 

But around this time, we can also observe a shift from favouring new providers like BPP to championing another low-cost alternative that can be expanded more rapidly so as to provide short-to-medium term challenges for the established universities: Further Education colleges teaching towards degrees validated by universities, ‘HE in FE’, which can currently account for more than 100,000 students. Martin Doel, Chair of the Association of Colleges, has estimated that most of his members could run a degree programme for £5,000 per year.

Cable repeated a warning given a few days earlier by Willetts: “Universities should not impede cost-effective provision of HE by colleges.” The risk espied is that the proposed funding regime might encourage universities to retrench in light of continuing supply-side restrictions (the maintenance of limits on undergraduate recruitment) by taking back students from validated courses taught in colleges. Cable again:

I hear from some FE colleges that, even when they have been in long term partnership with a University and have regularly filled their places, they are being blocked by universities from maintaining their student places. They allege anti-competitive practices. If there is substance in these suggestions, then this must end.  As I've repeatedly emphasised, the intention is for student choice to drive supply, not Government intervention. But it is a legitimate role for Government to examine options for intervention in markets which are not operating to best effect – and to support fair competition, for example between FE colleges and universities. Where we see barriers to entry, or uneven playing fields, we will take steps to address them.

Established universities may be fettered to prevent them using their enormous advantages to outcompete the alternatives. Willetts this time: “... if FE colleges can offer good-quality degrees at a more competitive price than a validating university does at its home campus, then I'm all in favour.  ... In the White Paper, we will be looking at how we can free FE colleges from these risks.”

Since FE colleges do not have degree awarding powers, one might ponder what fair competition with universities could exist. Willetts has the revolutionary notion to grant degree awarding powers to ‘non-teaching bodies’ to ‘open up the market’ and has spoken openly of ‘BTEC degrees’, thereby nominating to the task Edexcel, an examination board wholly owned by the education giant Pearson plc. “The combination of a local further education college, regional employers and an awarding body could be an important embodiment of the Big Society.”

Degree Awarding Powers
Since it does no teaching of its own, Edexcel would not face the conflicts of interest on places experienced by the universities. But, precisely because it does no teaching and has no academics, it does not qualify for degree awarding powers under current legislation. Since degree awarding powers are given to ‘autonomous’ institutions, those applying must offer: “a well-founded, cohesive and self-critical academic community that demonstrates firm guardianship of its standards”.

Even BPP’s Carl Lygo draws the line at such a transformation in our understanding of university-level education, though his institution has been part of the concerted lobbying to overhaul degree awarding powers and allow easier access to the protected titles of ‘university’ and ‘university college’. (BPP reports significant boosts to recruitment following the bestowal of the latter). Under current conditions, for-profit institutions like BPP, and potentially Edexcel, are required to reapply for degree awarding powers every six years, whilst the established universities have theirs indefinitely. Rationalising an opaque process involving the Privy Council and private reports from the QAA is one thing, requiring all universities to undergo renewal periodically puts established autonomy at risk, allowing BTEC degrees to go forward overturns most understandings of university-level education.

It is from this perspective that issues of regulation must be understood. Browne proposed the creation of a superquango, HE Council, to regulate the sector, thus ensuring “minimum standards” – and drawing into its ambit institutions currently independent. Such a regulator would respond to concerns about the quality of new provision but in so doing transform other core features of higher education. In one remark, Willetts compressed both ideas together while indicating a further form of provider: “The global higher education providers that operate in many countries from India to Spain to the USA need to know that we will be removing the barriers that stop them operating as universities here as part of our system – provided, of course, that they meet high standards which are a key feature of our higher education system.” It is clear those barriers had a quality assurance role and dropping them is inherently ambiguous. (Here we need to remember that in the jockeying with the universities, the government may float extreme ideas as part of a negotiation strategy).

Superquangos are not attractive to the Conservatives and ideological fissures can be traced by considering different conceptions of markets and regulation amongst members of the coalition. But all the indications are that some form of light-touch regulatory scheme will monitor those charging less than £6,000 (e.g. no Access Agreements), while ‘minimum standards’ may transmute into crude performance indicators for individual universities, such as how quickly graduates repay their loans; a measure unlikely to privilege a sense of education that seeks more than training for employability. 

From this brief survey, we can see different tensions surrounding degree awarding powers and what regulation would mean. There is a further dimension. Browne saw a major role for HE Council in acting as the administrator in the event of institutional failure. Few commentators have identified the shift reflected in this proposal: no public money will be made available in such circumstances; the government would no longer be considered the backer of last resort; the current understandings of ‘public’ and ‘private’ universities would be redefined. Quangos may not be inherently attractive, but as sector regulators they offer a transitional option away from public ‘ownership’ (hence their proliferation in the eighties and nineties).

Bankruptcies are made more likely in and around the capital given the number of arts and humanities institutions and that there is no London weighting allowance in the new fee-only regime. Some institutions will have to consider merger, we hear rumours of stock market flotations, but assets may also be attractive to private venture capital. The UK sector is now being described as a “treasure island” for privateers by market evangelists like the Parthenon Group).

Assets here include degree awarding powers and the ‘university’ title.  Such a prospect, private takeover, is governed by no current regulatory framework – the White Paper will rectify this situation. A likely purchaser is US education giant, Apollo, who also acquired BPP in 2009. Concerns around regulation and standards come to the fore. Howard Hotson in a recent edition of London Review of Books outlines the scandal surrounding Apollo’s University of Phoenix – the main player in the US for-profit market – where government figures suggest that only 9% of those enrolling complete after six years. Tellingly, it is a loan-supported environment and such regular income can be used to leverage further private capital (much as future gate receipts have driven some of the financial bubbles in Premiership football clubs): its commercial operation spends $1 billion on marketing and recruitment annually, since its primary aim is enrolment (its degree courses commence monthly). 

New College of the Humanities redux
So after this tour through the other private, for-profit providers waiting in the wings, let’s return to New College for the Humanities. Doesn’t it all look rather different from this broader perspective? Four comments:

First, the notion of undergraduate education for profit provokes when considered alongside the primary market for the initiative: public school students who miss out on their ‘first choice’. As The Economist comments dryly, “Supporters of the New College admit that it will draw most of its students from a pool of privately educated pupils who risk being shut out of the best publicly funded universities.” The whole initiative seeks to turn the clock back several decades: elite provision is not provision for social elites. It reinforces the notion that the arts and humanities are a luxury or privilege of the moneyed classes and that, nonsensically, these subjects are not well-taught outside of Oxbridge. It is a caricature of university-level education and defending universities from the broad range of threats also involves stating repeatedly – this is not a university.

Second, in order to see through the spin and subtle misrepresentations on the website for NCH, you have to be informed about higher education in England. The ethics of its pitch are dubious, not least in its dissembling of its corporate structure and its relation to the University of London (where are the photographs taken?). The new terrain may intend ‘caveat, emptor’, but let’s not rush to embrace that attitude.

Third, Grayling founded the company that became NCH with John Hall, who has funded the Conservative party and Willetts personally. He sees NCH as part of a large-scale assault on the public university:

my personal view is that the public sector should not be involved in providing services. They can pay for services but it is much better if there's a creative environment where there's lots of different types of enterprises competing to provide services. ... All the best things in our world are not provided by public enterprise because public enterprises get corrupted by bureaucracies. I think it's corrosive poison for this country to have public enterprises so deeply involved in providing services.

No one expects unanimity in corporations, but Hall’s views are the opposite of Grayling’s own declared position on the public funding of higher education. Understanding NCH as a corporation, rather than an emanation of Grayling, would require knowledge of all the investors and owners. There is a lack of transparency here: an anonymous Swiss family owns around 35%. Being asked to trust in the integrity of the academics is not appropriate given their limited equity and lack of board-level representation. 

Fourth, it is not yet time to jump ship. There still a lot of work that the government has to do to effect its plans fully: a large part of our political strategy must be raising awareness of these potential points of resistance. Debates regarding degree awarding powers and the character of autonomous university education may seem abstract when compared to the tripling of the tuition fee cap, but they are integral to the broader plans for marketisation. Vince Cable concluded his HEFCE lecture in this manner:

Every Government in living memory has spoken about the decisions of students having a real impact on HE – as did both Robbins and Dearing. We will finally make this happen. Supply-side reform, flexibility of student numbers, needs-blind off-quota places, more HE in FE, better part-time and two-year degree funding are all means to that end.

The decisions of students will only have real impact in a degraded provision. The potential for the mis-selling of subprime degrees is no exaggeration. In a private communication, Willetts assures me that all institutions will have to complete Widening Participation Strategic Assessments, but this measure needs consideration alongside the knowledge that the University of Phoenix specialises in selling its courses to communities with relatively little experience of higher education.

The White Paper promises a transformation of universities. As one eminent commentator puts it:  

Most ominous is the disclosure of the very extended nature of this plan (botched in detail but strongly driven) to dismantle the autonomy of higher education, woven right through the structure of many types of education and provider, enforced by complex fiscal devices more or less hidden from clear view by their complexity. ... the challenge is so adroitly disseminated across the whole of HE; each apparently local problem is joined up to the thinking behind all of them taken together, and the apparent muddle of detail shouldn't persuade viewers that the central threat isn't deliberate and serious.

These proposals are not yet enacted. The coalition is still fragile around this faultline. There is now an urgent need to develop the nascent forces that formed towards the end of 2010 so as not to leave these enormous changes in the hands of vice-chancellors and politicians.

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